Food Prices and Poverty, Pt. 3

There is another one interesting commentary on what Dani Rodrik wrote last week (and what I commented here). A short excerpt:

What if the poor also work for wages and agricultural prices affect labor markets? […] Carnegie finds that higher rice prices have positive overall poverty impacts, and lower prices have significant negative impacts on poverty, and that this is true even among many groups of urban consumers. […] They conclude: “Adverse agricultural price shocks can have negative effects on poor urban households through labor market transmission, which can offset the gains they might realize as net consumers of agricultural products.”

Although the research quoted was made in India, its results can be generalized to a considerable extent. The overall conclusion is that high food prices are better for all than low ones. This is a somewhat counter-intuitive result.

For more, see the link above.


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